Posts Tagged ‘University’

Once upon a time there was a solo-mum…

… and a Wicked Wacko Witch.

Sally* is 37 and a solo-mother with an 18 year-old (Wayne*) and 11 year (Zack*) old sons.



Sally had Wayne to her first partner, but the relationship did not last because of drug-taking and violent abuse on his part. (Some months after they separated, he committed suicide.) Sally went on to the DPB, raising her newborn son by herself.

Seven years later, Sally met someone else and formed a relationship with him. The relationship went well and she became pregnant (a son, Zack) to her new partner.

As  her pregnancy progressed, Sally’s partner seemed to go of the rails,  and he increasingly  took up  drink and drugs with his boozy mates. As Sally said, he “was more into his mates than his family” and she finally  threw him out.

Sally was adamant she did not want someone like him as a role-model for her sons. She went back on the DPB and began to examine her options in life.

Eventually, Sally  applied for a course at Victoria University for a bachelors degree  in early childhood education. She applied for, and got, the Training Incentive Allowance (TIA).

Zack’s father saw his young son a couple of times during his first year as a newborn and infant, but thereafter showed little interest in maintaining contact. He eventually disappeared from Sally and her children’s life. She was on her own to raise her sons – a role she took seriously, and sought no new relationships with men.

Instead, she applied herself to her university course.

Sally says that the TIA helped her immensely, paying her transport, study-costs, fees, and childcare for her sons. She says,

You could only get the TIA on the DPB, not on the dole, which I thought was unfair.”

After her graduation, Sally followed up with a Masters degree, which took another four years in part-time study. During the final two years of her uni studies, she took up a part-time job. This decreased the amount she received on the DPB, and her part-time job was taxed at the Secondary Tax Rate (her benefit was considered as a “primary job” by the IRD).

Sally took out a student loan for her M.Ed, as WINZ would not pay the Training Incentive Allowance for higher university education.

One could view the “claw back” of her DPB and higher tax-rate on her part-time job as a dis-incentive which penalised Sally, and others in her position, but she persevered. With end-of-year tax refunds, she says it “all squared out” – but she could have done with the extra money through the year.

Sally graduated and got her Masters degree in early childhood education. By this time, Wayne was 14 and Zack, 6. One month later, she found a full time job and replaced the DPB with a good salary. She says that the MA gives her an extra $11,000 per annum.

During her studies and part time job, Sally raised her two sons – one of whom was increasingly “challenging” with Aspergers and ADHD.

(This blogger can confirm that young Zack – whilst a bright, personable child – can also be “a handful”, and was effectively thrown out of his previous school for “disruptive behaviour”.)

We discussed the Training Incentive Allowance, which Paula Bennet used to put herself through University. I asked her,


With being on the DPB, and with the availability of the TIA, do you think it assisted and motivated you to get yourself of the Benefit?”

Sally replied,

With the TIA, definitely. If I’d have to borrow money, yeah, I think that would’ve been quite daunting, I guess. I mean, I had to take out a student loan anyway, so if I’d have to borrow more, it would’ve taken longer to pay back. The extra assistance helped.”

I asked,

So the TIA, you believe, was a good incentive?

Sally responded,

Yep, yep, otherwise some people would probably stay on the benefit, especially when working part-time and being on a part benefit, is  hardly  worth it, especially at a certain level. So I think training to get a higher income to make it worth going off the benefit and not have to borrow thousands of dollars for it, yeah, that’s a good incentive.”

Sally has now been off  the DPB; in paid employment for the last four and a half years; and paying tax on a good salary. She is also spending more, and her oldest son, Wayne is now doing tertiary education himself.

Being a taxpayer means that she is now “paying it forward”, to support the next person who requires state assistance. This is what welfare should be about.

Unfortunately for us, the Minister for Social Welfare, Paula Bennett, who was on the DPB herself and used the Training Incentive Allowance to gain a University degree – has canned the TIA.


Paula Bennett was on the DPB and used the Training Incentive Allowance to gain a University degree.



Only a National Government can screw up a system that actually succeeded in training and upskilling people; getting them off welfare; and into paid work. One cannot help but wonder if National secretly wants thousands of people on welfare, to create a  pool of cheap labour, and drive down wages…

Sally has worked hard; bettered herself; improved her family’s financial position; and has raised two sons in a good home – one of whom is in tertiary education now.

This is a good outcome due to progressive government policy.

Please, Mr Key, may we have some more?





* Sally and her son’s names have been changed to protect their privacy.




Greed is good?

28 August 2011 54 comments



As we look back on the last 25 years of neo-liberal “reforms”, including User Pays; the canning of “Labour’s” superannuation savings plan in 1975 (by Muldoon – after being elected into office with his infamous “Dancing Cossacks”  TV ad); and National’s continuing high popularity in the polls, despite their avowed proposal to sell-down 49% of several State assets,  – it seems abundantly clear who has been  pulling the “strings”.

No, it’s not Washington. Nor the Bilderbergers. Nor the UN/New World Order/Illuminati.

The answer is mind-numbingly far more prosaic:  it’s us – the Baby Boomer generation. The 1960s and 1970s rebellious youth  weren’t just an “aberration” – they were a clear signal that the Baby Boomers had arrived; could be inclined to  incredible selfishness (hence the term the “Me Generation”); and we voted individually for personal gain – on a collective basis.

Yep. We have seen the “enemy” – and it’s us; graying; self-centered; resentful of the young (who we’ve well and truly shafted);  and looking back at ourselves in the mirror, wondering where it all went wrong.

The case of  Surgeons Ian Penny and Gary Hooper, who tried to rort the tax system using Trusts  and companies – even though they had graduated BEFORE student loans and fees were implemented in 1992 – is the clearest example ever of our collective unbridled selfishness.

To re-cap;


A court battle is over for two surgeons who challenged Inland Revenue over claims they tried to avoid tax bills worth tens of thousands of dollars.

The Supreme Court has ruled unanimously against Ian Penny and Gary Hooper, saying they underpaid themselves from their own businesses to avoid the top personal tax rate.

The issue arose after the previous Labour-led Government raised the top personal tax rate to 39%, compared to the company rate which was then 33%.

The orthopaedic surgeons openly paid themselves a lower salary than the market rate, arguing that they had a choice about how they operated their business.

They tried to challenge a Court of Appeal decision that found in favour of Inland Revenue, which said the surgeons had paid themselves salaries too small to be commercially realistic.

It said they were therefore able to avoid paying the top tax rate, while the balance of their businesses’ profits went as dividends to family trusts.

The trusts funded items such as a loan for one surgeon, and a holiday home for the other.

Inland Revenue said using those business structures to create artificially low salaries amounted to tax avoidance, saving each man between $20,000 and $30,000 a year for three years, beginning in 2002.

Supreme Court Justice Blanchard on Wednesday delivered a judgement supporting that argument, ordering Mr Penny and Mr Hooper to pay Inland Revenue $25,000 in court costs.

Mr Hooper told [Radio New Zealand ]Checkpoint the court has created a salary benchmark that is higher than the one countless private practitioners have been using.

He says they have been following Inland Revenue advice and calculating their salaries based on public hospital rates.

An Inland Revenue deputy commissioner welcomed the ruling, telling Checkpoint it clearly states and reaffirms what the department’s commissioner felt was the case all along. Carolyn Tremain says IRD has yet to fully absorb the implications and consequences of the ruling.

PricewaterhouseCoopers John Shewan, who appeared as a witness for the surgeons, said the case is important for individuals and firms. He said tens of millions of dollars may now be claimed by Inland Revenue from cases it still has open on this matter.

Source:  Radio New Zealand



Surgeons Ian Penny and Gary Hooper set up companies, owned indirectly through trusts, to buy their surgical services and paid themselves artificially low salaries.

After 2000, Hooper’s personal income fell from $650,000 to $120,000 a year. Penny’s dropped from $302,000 to $125,000, and then to $100,000, while the income of their companies grew.

Source:  Dominion Post


What makes this case of case of tax avoidance stand out is that none of it was ever necessary in the first place.

Dr Ian Penny received his Bachelor of Medicine Bachelor (MB ChB) of Surgery from Otago University in 1981.  He became a Fellow of the Royal Australasian College of Surgeons in 1990.

Dr Gary Hooper received his Bachelor of Medicine Bachelor (MB ChB) of Surgery  from Otago University in 1978 and became a Fellow of the Royal Australasian College of Surgeons in 1985.

In simple terms, they graduated as doctors in the late ’70s and early ’80s. Tertiary education then was still nominally free. Plus,  student allowances were available to most students,

“Up until 1992, nearly every student (86.4 percent) studying at a public tertiary education institution in New Zealand received a living allowance or grant while they studied.

 Prior to the mid 1970s, student support was based on a system of bursaries and scholarships. In 1976, a new system of government-funded tertiary bursaries was introduced. This included a study or living costs grant that was available to most students.”

Source: NZUSA


Student fees and student loans came into effect in 1992, during the Bolger-led National Government, when Ruth Richardson was Minister of Finance (and coincidentally the same year that Shortland Street came on air).

In simpler terms, Dr Penny and Dr Hooper enjoyed the benefit of near-free tertiary education before fees were raised in 1992. They had no student loans to repay, as  medical students currently do, and may well have benefitted from receiving a Student Allowance.

Contrast their free tuition with that of medical students, in the 21st Century:  “on average medical students will graduate with around $80,000 of debt and nearly 90% will have a student loan“, according to the  New Zealand Medical Students’ Association in April, last year.

So with a free education; in receipt of student allowances; and no student loan; Dr’s Penny and Hooper were, as Revenue Minister Peter Dunne stated;

… the important thing about this decision is to bear in mind the scale of what was happening. This wasn’t people minimising their income because they were reinvesting in their business. This was people minimising their income because they were actually minimising their tax liability but still enjoying the full benefits of the income they were in reality earning.


So not only did these gentlemen benefit from a free education – but they were now minimising their income because they were actually minimising their tax liability [whilst] still enjoying the full benefits of the income they were in reality earning.”

God, you’ve no idea how sick this incident has  made me.  Let me explain why.

Prior to the introduction of “Rogernomics” in 1984 (and National’s addition from 1990 onward),  education in this country had been free (or as close as possible to free) to nearly all New Zealanders. Education whether at Primary School or University was funded by the previous generation; our Mums & Dads; Grandmothers & Grand dads. The idea was terribly simple; education was a right, and not to be determined by ability to pay.

In turn, as we graduated from schools and Universities, we – my generation, the “Baby Boomers” – were to fund our children through their education, through our taxes.

Except, it did not quite happen that way.

In 1984 we unknowingly elected a Labour Government that had been taken over by a secret cabal of neo-liberals, conservatives, and proponants of the Free Market. A raft of  radical changes were implemented throughout the economy and impacting directly on society.

Despite public objection; mass protests; and even vocal opposition from within the Government by some Labour MPs such as Jim Anderton, Labour was re-elected in 1987.  Curiously, they had increased their majority from 55 to 57.

During Labour’s two terms (1984 to 1990), they cut taxes twice, and implemented a new tax in 1986, called GST.

National followed, implementing User Pays in tertiary education whilst  cutting taxes in 1996 and 1998.

In 2008, despite evidence that the world was plunging into a global recession, John Key promised that National would again cut taxes. As New Zealand went into deep recession; unemployment rose; businesses closed down – National cut taxes in April 2009 and October last year.

Most of the public, it seems, will swallow User Pays if they stand to reap a benefit from tax cuts.

The social contract therefore, was well and truly broken between our (the Baby Boomers) generation, and our parents/grandparents.

We had taken their gift – that of free education which they had paid for – but we decided not to pass it on to our children. Instead, we accepted one tax cut after another. And social services were either cut or User Pays applied, to pay for those tax cuts.

To my generation of fellow Baby Boomers, I say this; we’ve well and truly  shafted our own children. We denied them the very same opportunities of a free education that our parents had bequeathed to us. Instead, we voted ourselves seven  hefty tax-cuts; instigated User Pays; and left our children saddled with $13.9 billion in student debt.

Is it any wonder that our children our leaving New Zealand in greater and greater numbers? They’re not just emigrating to seek better paying jobs – they’re sticking it to us for our unmitigated greed. Whether consciously or sub-consciously, our children realise what our generation has wrought, and by god, they are not happy.

No doubt there are some folk who will cheer on Drs Penny and  Hooper. These people  feel that paying taxes is “unfair” and that it is unreasonable for the State to take the money that they have worked hard for.

Perhaps I should take a moment to remind these people what their taxes were, and in many cases  are still, used for…


Inter-island Ferry, Aramoana

Dams and other power generation projects

Our first television broadcast system

Roading and highways


University education

Dental care for our Children

Our Police and justice system

Railways and other public transport


State Housing

Infrastructure such as power transmission lines

Social welfare and superannuation


Postal and telecommunications systems


Many of these assets no longer reside in public ownership – but they were originally built and maintained by previous generations of taxpayers; our parents, grandparents, et al.

As the Baby Boomer generation, what have we built and left our children?

$13.9 billion in student debt?

No wonder they are departing our shores…



But I leave the last word to this expat Kiwi, now living in Australia,

A Victorian-based Kiwi with a student loan debt, who did not want to be named because he did not want to be found by the Government, said he did not intend to pay back any of his student loan.

The 37-year-old’s loan was about $18,000 when he left New Zealand in 1997. He expected it was now in the order of $50,000. The man was not worried about being caught as the Government did not have his details and he did not want to return to New Zealand.

“I would never live there anyway, I feel just like my whole generation were basically sold down the river by the government. I don’t feel connected at all, I don’t even care if the All Blacks win.

“I just realised it was futile living [in New Zealand] trying to pay student loans and not having any life, so I left. My missus had a student loan and she had quite a good degree and she had paid 99c off the principal of her loan after working three years.”

Source: Dominion Post



Further Reading

Greed of boomers led us to a total bust

New Zealand’s wealth gap widens

Over-55s own most of NZ’s wealth